Why is Intellectual Property important to business?

2017-04-24

Simon Webster is CEO of CPA Global, a technology company that helps organisations manage intellectual property including patents and trademarks. CPA Global’s clients include Canon, Microsoft and many of the largest law firms in the world.

For many companies their intellectual property portfolio is the largest asset that they own, responsible for as much as 70% of their corporate value. CPA Global deploys technology and other resources to help companies maximise value from IP.

Why is Intellectual Property important to business?

Intellectual Property (IP) protection rewards innovation by enabling the inventor to reap the rewards of investment in ideas. If there is no protection or reward for innovation, why innovate at all? IP is often the largest asset portfolio that a company has, with a greater value than offices or factories. It is also playing an increasingly significant role in mergers and acquisitions. For example Google acquired Motorola for $12.5 billion before selling the company to Lenovo (minus its valuable IP in smartphone technology) for $2.91 billion.

Technology can now help companies understand which patents are most valuable to a company, support growth of revenue from IP licencing and even support the future direction of research and development activity to help drive more of the most effective innovation.

Are there any common misconceptions that firms or businesses have in relation to their IP and patents?

Initially companies need to understand what and how they can protect assets. Brands can be protected through trademarking and unique ideas can be protected via patenting.

Applying for protection for ideas can be both time consuming and expensive. Companies need to judge this investment against the rewards they might receive. They also need to understand which ideas they can protect and which they cannot. Patents are usually issued for specific ideas relating to certain applications in certain industries. The more specific a patent, the more likely it is to be granted.

Companies also need to understand when it is valuable to protect ideas and when it is better to use other forms of protection such as trade secrets.

How can entrepreneurs understand more about the viability of their ideas and whether they should look to protect them?

This is a huge challenge in the digital era. Companies are globalising faster than ever and this means navigating a minefield of IP issues across multiple territories for different brands and ideas. IP specialist law firms can help companies to understand the ideas and brands they need to protect, where they need to protect them and the consequences. A well-crafted patent can be worth millions of dollars but can cost hundreds of thousands in application fees. IP should be one of the first considerations for entrepreneurs that are looking to maximise return on their ideas.

How long does it take to secure protection for an idea?

For a patent there is a process whereby searches are conducted to check the viability of patenting an idea initially. This will ensure that the idea is patentable before major investment takes place. This process takes a couple of weeks. After this the application is drafted (2-4 weeks) and can be filed. At this point the idea is partially protected and described as “patent pending”.

After the filing process is complete the patent offices where the filing has been made will examine the idea. This process can take up to three years but during this time the patent can be commercialised.

At CPA Global we are very aware that this process is very slow compared to the velocity of business in the technology age. We deploy technology to speed up the process of searching and filing intellectual property globally, making it faster and simpler to do so.

Which geographies does protection cover?

Patents are territorial rights. The rights are only applicable in the countries where patents have been granted. Many entrepreneurs need to consider which countries are important to them and where they will be trading.

Of course, for technology this is more problematic because it can often be relevant to the global market. In some industries, such as video games, companies prefer to release games unprotected to gain fast traction or momentum in the marketplace. However, for an industry such as pharmaceutical, obtaining some form of protection before development can be critical to releasing the funds for development and commercialisation. Multiple applications can ensure that an idea is protected globally.

What advice would you give to CEOs around best practice for protecting innovation?

Today entrepreneurs have so much to do to ensure competitive advantage: establish a business; analyse which markets are relevant; protect their ideas; establish funding; grow internationally; recruit the right people. Entrepreneurs are time poor.

I would encourage CEOs to establish the viability of idea protection to their business as quickly and early as possible, generate the right partnerships to ensure protection is real and invest in protecting ideas effectively. Do not ignore IP issues – chances are they will generate the largest asset on the balance sheet.

How can a business owner protect an unpatentable product from unfair competition and copycats?

It is difficult. First companies must establish whether they are infringing on any other company’s IP. If so it will be necessary to strike a licencing deal or a relationship with the other party. The whole process of IP protection is to reward innovation so it could be argued that if an idea is not protectable, it is not unfair competition.

In these circumstances, being first to market and iterating the idea to deliver a better product is critical. Consider, for example, popular games apps. Almost immediately they are copied by others, yet if there is an opportunity to establish the original as a market leader quickly, it can gain traction. Entrepreneurs have to balance the reality of the slow process of IP protection against the need to gain market share quickly.

What trends are you seeing in innovation?

Innovation used to take place in big companies, typically within the research and development department. Now it is coming from anywhere. I think we have become a more innovative economy – more prepared to take risks and back ideas.

This has been supported by several trends. Twenty years ago, only companies that could afford hugely expensive computer processing could innovate effectively. Now this resource is available on demand. That changes the innovation landscape. Resources such as crowd funding sites enable people to come up with an idea and test its viability quickly. The improved connections between Universities and industry is also bringing a new level of innovation to market quickly. The health of the global economy is directly linked to innovation so a strong innovation landscape is critical to future economic success.